The Andhra Pradesh High Court has given its nod for the amalgamation of Mahindra Satyam and Tech Mahindra.
Delivering its judgment on a batch of petitions, Justice N.R.L. Nageswara Rao has dismissed all the petitions that objected to the merger and swap ratio for the merger. On Tuesday, in his judgement observed that all the pending investigations and prosecution in the issue will continue till they are vacated or disposed off by relevant authority.
The merger, which will take a few more weeks to be completed, will come into effect with a retrospective effect from April 1, 2011. The company will have to file the approved scheme of amalgamation with the Registrar of Companies in 30 days.
Markets responded positively as the Mahindra Satyam scrip went up by 4.17 per cent to close at Rs 111. The Tech Mahindra shares went up by 3 per cent . to close at Rs 968 on BSE.
“All the debts, liabilities, duties and obligations of Mahindra Satyam are the responsibility of Tech Mahindra,” the court pointed out.
It directed Tech Mahindra, which owns Mahindra Satyam, should assist with Serious Fraud Investigation, Enforcement Directorate and other investigation agencies probing the issue.
Mahindra Satyam and Tech Mahindra, along with their subsidiaries, employ about 80,000 employees with combined revenues of about $2.4 billion. Though it got the court permission now, the two companies have begun as one entity for over one year, with joint go-to-market strategies. The companies have appointed strategic business leaders, who have been mandated to take care of the two businesses.
Though the duo received all other permissions last year itself, the court nod got delayed here as a few minority investors, some companies allegedly promoted by Ramalinga Raju and an IL&FS arm Ekadanta Greenfields had opposed the merger.
While the minority investors opposed the swap ratio, the IL&FS arm argued that the IT firm borrowed some Rs 1,230 crore from it and some other firms. The new management of Mahindra Satyam had been arguing that it need not pay back the alleged advances as they were not reflected in the books.